Credit Card Quick

Past-Due Credit Cards and Wage Garnishment: What You Need to Know

Introduction

If you fail to pay your credit card bills, your creditors may be able to come after their money through the courts and win a settlement against you; a settlement that includes a wage garnishment.

Here is what you need to know about wage garnishment:

• Wage garnishment is regulated by state law, although some federal laws may exist when it comes to wage garnishment, as well.
• In general, about 25 percent of your after-taxes wages can be garnished by your creditors. As a result, regardless of how many creditors obtain an order of garnishment from the courts, the total amount of your garnished wages cannot, in general, exceed 25 percent of your after-taxes earnings.
• There are a number of ways to prevent wage garnishment. Contact your creditors and set up a payment plan. Make sure you clearly communicate your desire to pay back your debt, but that you need a more affordable payment plan. Ask your creditor to send you the updated payment plan in writing for your records. Most creditors will agree to a smaller payment each month, provided you keep true to your word and pay every month. If you set up a payment plan and then fail to keep up your end of the deal, expect your creditor to take legal action.
• If the creditor does not agree to a more manageable payment plan, know that you have rights. You have a right to defend yourself in a court proceeding where the creditor is seeking wage garnishment. If you show up to the court date, show the judge your records and explain your attempts to make good on the debt; it is likely the judge will require the creditor to accept your payment plan.
• Keep in mind that wage garnishment is the last resort for most creditors, and you should make every attempt to clear your debt and find a solution to your debt problem before a court proceeding and wage garnishment take place. Cut down on your spending, consolidate your debts, or contact a credit counselor, if necessary.

Beware of Small Business Credit Cards with Personal Liability Clauses

Credit Card Types

Small business credit cards offer many small business owners loads of convenient and practical features that allow them to run their businesses more efficiently; which is why so many small business owners have flocked to small business credit cards over the last, few years.

You may think it is in your best interest to take out a small business credit card for your business, and that generally holds true, but there is an exception to this rule.

As more and more credit card companies put the brakes on consumer credit, there are a number of changes that have also taken place; in particular, there are many credit card companies that include personal liability clauses with their small business credit cards.

Personal Liability Clauses Increasing

A small business credit card that features a personal liability clause is something that you might want to steer clear of, mainly because it means that if you are unable to pay your credit card because your business didn’t succeed, you may be personally responsible for paying back that credit card debt.

In other words, the credit card company can come after you, the cardholder, to pay your business credit card. Most small business owners run their business so that the business’s assets and liabilities remain separate from their own, personal accounts. However, credit card companies, in an effort to recoup some of their losses due to the lousy credit market and equally lousy economy, have started attaching small business debt to the cardholders who own the businesses.

Your Small Business Card may be Linked to your Personal Assets

That essentially means that a creditor may now be able to come after your personal assets if you are unable to pay your small business debt.

Unfortunately, the new credit card legislation does not cover small businesses, leaving many small businesses on their own when it comes to fighting creditors.

It therefore pays to take the time to read the small print of your small business credit card. Ask questions if you don’t understand the card’s terms and conditions and, if the creditor has a personal liability clause in their card’s terms and conditions, consider looking for another small business credit card.